If you remember the concept of “Proof of Stake” (e.g. no “mining” with special hardware needed), most of alternative cryptocurrencies out of Bitcoin and Ethereum still require a good amount of “full nodes” that keep the decentralized network up and running. Masternodes are the back-end network of proof-of-stake cryptocurrencies.
1. Masternodes and Blockchain
A wallet, or a whole blockchain instance, runs on millions of computers worldwide keeping the various blockchains up and running. Masternodes do that in real-time, with more advanced setups, and often running in data centers.
This is where the opportunity is for cloud and hosting service providers. The modern way of mining – keeping public decentralized blockchain networks up and running.
Why are Masternodes gold for cloud and hosting providers?
- You can setup more/better targeted solution offerings for people who are interested in hosting their cryptocurrency masternodes with certain pre-configurations.
- Cloud and hosting providers can run their own masternodes with spare hardware and monetize this new opportunity.
- When running masternodes as a cloud & hosting provider:
- If you run pre-configured masternode VPSs that you sell to end customers, you can charge a premium for the managed service (security or monitoring, for example) and simplify the automation of masternode VPSs.
- If you run one or multiple masternodes yourself, you can monetize spare infrastructure or hardware in a much better way.
How to make money from running masternodes
Generally, the masternode concept, like Dash or Zcoin, is an investment. So besides helping to keep a blockchain network up and running, you are:
- Investing in cryptocurrency money upfront, limiting entry to those who really mean business.
- As soon as you have the node up and running, you’re getting a share of the transaction fees. At the time of writing, crypto prices are low, so you can sell high later. And considering the run into Blockchain worldwide was so fast, it’s likely prices will rise again soon.
Here’s a good resource on masternode types and their relevant ROI.
But before you set up your own Masternodes, please:
- Make sure you understand the technical platform, team and project behind each masternode concept. And be certain there’s a real cryptocurrency and blockchain running behind it.
- Diversify your investments and don’t put all your money into one single masternode concept or cryptocurrency.
- Comply with AML (Anti Money Laundering) and/or KYC (Know Your Customer) Laws.
Masternode providers today:
2. Enterprise Blockchain Hosting
So far we’ve been talking about public Blockchains. That means zero central control and all of them decentralized. Some would call them “uncontrolled” despite the built-in consensus mechanisms those blockchains have.
However, for some time, there’s been another approach – private/permissioned Blockchains. This rising star will convince large enterprises to benefit from Blockchain technology because all stakeholders can easily share data across multiple companies and competitors in a secure way. And this wasn’t available before at reasonable cost.
The main difference is that they’re only available to a set of stakeholders with read and/or write access. Often, an association of adjacent companies or competitors use such stakeholders for a secure proof of record for a selected set of data. This is based on distributed consensus algorithms – and still not seen by the rest of the world.
This means great Enterprise/ permissioned Blockchain Hosting opportunities for cloud, managed and infrastructure providers. Because they can build, run and manage such Blockchain infrastructures for their customer or multiple customers.
There are several example projects in production already, even outside the classic financial use case. Including identity systems, real estate, supply chain and more. Ultimately, they provide a better approach than traditionally centralized databases.
Companies and organizations to check out if you want to learn more:
- Swisscom Blockchain AG
- Hyperledger – part of Linux foundation
- IBM Blockchain
- Ripple: A special case – partially public and used by Banks
Stay tuned for the final part of the Hidden Blockchain Opportunities series next Monday. We’ll talk about one more use case for hosting and cloud service provides – Decentralized Cloud storage!
The information in this article isn’t legal or financial advice, nor decision guidance. Hence, by no means does it substitute dialogue with a finance professional. The content is also not addressed to those residing in countries that prohibit access to such information due to prevailing legal norms.
Moreover, this article does not constitute or form part of any offer or solicitation to buy or sell securities. We haven’t had regard to the specific investment objectives, financial situation, tax position or unique needs and constraints of any individual person, company or any specific group of persons.
This article doesn’t claim to be comprehensive or contain all necessary information which a prospective investor may need in order to reach an investment decision. Therefore, before committing to a purchase, you should do your own research of the securities and info provided. And/or seek advice from a financial adviser regarding suitability, taking into account your specific investment objectives, financial situation or needs.
This ecosystem is growing everyday, and platforms like: https://www.4stake.com/create1 contribute a lot to make masternodes more accessible to “normal” people, with a few clicks you can create your full or shared MN, worth the time to take a look.